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August

The amendments, which are being proposed in response to feedback received by the FASB–IASB joint revenue recognition transition resource group, intend to clarify certain guidance related to principal versus agent considerations.

Comments on the proposed ASU are due by 15 October 2015.

The IASB has also issued an ED on this topic; the proposed amendments in the IASB’s ED are the same as those in the FASB’s ASU.

For each of the three types of voluntary reporting and reporting frameworks the briefing describes the reporting subject matter and its related purpose, outlines the intended users of this reported information, provides the source of the guidance/framework/standard, outlines at a high level the structure and key features of the reporting guidance, and describes the level of acceptance and uptake of the guidance. In addition, the publication compares the three voluntary types of reporting guidance at a high level.

The International Accounting Standards Board (IASB) has released the tentative agenda for the meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 1-2 October 2015. The meeting will discuss the agenda consultation and a number of the IASB's active projects, including the conceptual framework, clarifications to IFRS 15, measuring quoted investments in subsidiaries, joint ventures and associates at fair value, pollutant pricing mechanisms, and the equity method of accounting.

The agenda for the meeting is summarised below:

Thursday, 1 October 2015 (9:30-18:00)

Agenda consultation 2015

Feedback from the World Standard Setters (WSS) meeting (to be held 28-29 September 2015)

Conceptual framework

Feedback rom the WSS meeting on:

IAS 37

Measurement

Guidance proposed in the Conceptual Framework exposure draft on selecting a measurement basis

Implications of the exposure draft for the project on rate-regulated activities

As reported earlier, the European Financial Reporting Advisory Group (EFRAG) intends to finalise the long-awaited endorsement advice on IFRS 9 ‘Financial Instruments’ next week. The draft of the final endorsement advice to be adopted has now been made available.

As in the draft endorsement advice published in May 2015, EFRAG continues to believe that IFRS 9 meets the technical endorsement criteria, would be conducive to the European public good and should be adopted for the use in the European Union. However, EFRAG notes that the mismatch in timing of the future insurance contracts standard and IFRS 9 will lead to disruptions in the reporting by insurers making their financial reporting less understandable for users while increasing costs for preparers. As earlier, EFRAG states that this mismatch in timing makes “a strong case for having the IASB defer the effective date of IFRS 9, so as to align it with the effective date of the future insurance contracts standard, albeit only for insurers and as an option”. EFRAG notes that the IASB has started investigating various approaches that would address the issue, including a deferral. However, as the IASB has just started on these explorations, EFRAG states that it is unable to assess whether these actions will mitigate the negative effects of the timing mismatch:

However, the IASB is at the early stages of its work and therefore we are not in a position today to assess whether their initiative will remove the concerns created by the non-alignment of the effective dates of IFRS 9 and the future insurance contracts standard.

EFRAG advises the European Commission to request the IASB to proceed with the necessary IFRS amendments as quickly as possible and notes that any solution (deferral or other) remains sub-optimal and should be of a very temporary nature.

In summary, EFRAG states in its endorsement advice that IFRS 9 should generally be adopted, however, does not include final advice on the insurance standard matter and therefore leaves open how the European Commission should react – go forward with endorsing IFRS 9 for all companies in the hope that the IASB will come up with a sustainable solution to the timing mismatch problem or the hope that IASB will defer the effective date of IFRS 9 for insurers or whether even an EU-only deferral should be chosen.

In August 2015, the IASB launched a webcast series on the proposed changes to its Conceptual Framework. Eight pre-recorded webcasts will be posted to the IASB's website weekly. The fourth instalment was posted today.

The on-demand webcasts provide detailed discussions of each part of the IASB's May 2015 Exposure Draft ED/2015/3Conceptual Framework for Financial Reporting.

The staff of the International Accounting Standards Board (IASB) have made available a summary of the discussions of the Accounting Standards Advisory Forum (ASAF) meeting held in London on 16-17 July 2015.

The topics covered during the meeting included:

Insurance contracts. ASAF members discussed two papers by the AASB and NZASB (on the recognition pattern for the contractual service margin in profit or loss and on the rate used for interest accretion on the contractual service margin) and an update on the IASB’s tentative decisions since the last ASAF meeting.

Discount rates. The IASB staff provided a summary of findings from the research project on present value measurements and sought ASAF members’ views on the findings. The staff also sought ASAF members’ views on the next steps in the project.

Conceptual Framework. ASAF members discussed the recognition and derecognition proposals in the Conceptual Framework ED. They were also invited to share their views on an EFRAG paper on the reporting of income or expense in profit or loss or OCI.

Provisions and contingent liabilities (IAS 37). The staff provided an overview of the IASB's research project on project on IAS 37 and sought initial views of the ASAF on whether the IASB should start an active project to amend IAS 37 and, if so, what the scope of that project should be.

Disclosure initiative. The IASB staff introduced a paper describing the content of the Principles of Disclosure discussion paper and sought the ASAF members’ views on whether there were any other issues that should be included in the discussion paper. The staff also introduced a paper discussing proposed changes to the IFRS Taxonomy due process, which were recently trialled on the exposure draft of amendments to IAS 7 as a result of the disclosure initiative.

Dynamic risk management. The IASB staff gave an overview of the feedback received on the discussion paper and asked for the ASAF members’ comments on any additional information needs relating to an entity’s dynamic risk management of interest rates that are not included in the summarised feedback received.

Rate-regulated activities. ASAF members provided views about possible accounting approaches that could be developed to reflect the financial effects of the ‘defined rate regulation’ introduced in the discussion paper published in September 2014.

IFRS 15. The IASB staff provided an overview of the recent developments relating to the new revenue standard, including activities of the Transition Resource Group, feedback from the comment letters on the exposure draft on the effective date of IFRS 15, and an overview of the forthcoming exposure draft of clarifications of IFRS 15.

A report has been issued summarising the discussions at the meeting of the International Forum of Accounting Standard Setters (IFASS) held in Dubai on 23 and 24 March 2015.

Highlights from the meeting included:

IASB workplan and IFRS Foundation developments

Participants discussed current projects on the IASB agenda and IFRS Foundation activities and activities that national standard-setters may wish to undertake to support the IASB in achieving its work. Projects discussed were:

Conceptual framework,

Disclosure initiative,

Insurance contracts,

Leases,

Business combinations under common control,

Financial instruments with characteristics of equity,

Equity method of accounting,

Discount rates, and

Post‐employment benefits.

Participants also discussed the agenda consultation, research and implementation projects in general, and interpretation of standards by regulators.

Part of the discussions around IASB projects were also the transition resource groups for revenue and impairment, bundling of issues that arise in the discussions, the question of how long they should be kept operating, and whether standard-setters should encourage regulators to back off from having one right answer on a particular issue.

Reports from regional groups

Representatives from the Asian-Oceanian Standard-Setters Group (AOSSG), the European Financial Reporting Advisory Group (EFRAG), the Group of Latin-American Accounting Standard Setters (GLASS), and Pan-African Federation of Accountants (PAFA) explained recent developments in each of the groups.

IPSASB matters

Participants were updated on IPSASB developments since October 2014. One focus of attention was the public consultation on IPSASB’s strategy and work plan and the need find the right balance between public sector specific and IFRSs convergence projects.

EU Expert Group on IAS Regulation

Participants were provided with some context and an update on this topic. The positive outcome of the IAS Regulation evaluation was stressed, and the expectation was voiced that the EC was “neutral or relatively happy” with the preliminary feedback.

Post-implementation Review of IFRS 3 Business Combinations

During this session, participants discussed how to improve the IAS 36 impairment test, subsequent accounting for goodwill, identification and measurement of intangible assets, useful life of goodwill, bargain purchase and non-controlling interests, and the definition of a business.

Administrative matters

The next IFASS meeting will be held in London on 29 and 30 September 2015. The first meeting in 2016 will be held in Toronto on 4-5 April. Taiwan has offered to host the first meeting in 2017.

The IFASS Chairman noted that she proposes to step down after the Toronto IFASS meeting in 2016. A call for nominations will be made after the September 2015 meeting.

Conceptual Framework

Participants discussed the business model and P&L/OCI presentation, measurement, the definition and recognition of liabilities, and the reporting entity.

Topical Issues

Participants then discussed two topical issues: Application of IFRS 10 – Concerns arising from paragraph 4(a)(iv) and Classification of non-Current liabilities in the event of default – IAS 1 and the new ED on liability classification.

Effects Analysis Study Report

The IASB Vice-Chairman presented the topic and participants took away from the presentation that with all projects, they need to consider the effects of proposals in their jurisdictions and report these effects to the IASB during the lifecycle of the project and not just when asked to do so.

New IFASS member projects

Two new projects were introduced during this meeting. The Korean Accounting Standards Board presented "Costs and Benefits of IFRS Adoption in Korea – Preparers’ Perspectives" and the Italian standard-setter is conducting a project on "Disclosures related to the Application of IAS 8". The latter forms part of the IASB's disclosure initiative.

The European Financial Reporting Advisory Group (EFRAG) has released the agenda and first meeting papers for the next EFRAG Board meeting, which will not only see the finalisation of the long-awaited endorsement advice on IFRS 9 but also discussions on a new pro-active project on accounting implications of low or negative interest rates.

While many standards require some form of discounting in the measurement of assets and liabilities, the implicit assumption is that there is a positive time value of money so the present value of an asset to be recovered or a liability to be settled in future is lower than the nominal amount. As the Eurozone has recently experienced negative interest rates with the result that the present value of assets or liabilities is higher than the future inflow or outflow of cash, EFRAG is considering a proactive project on accounting issues arising from low or negative interest rates with special focus on financial instruments.

The EFRAG Board still needs to determine the scope of the project. The agenda paper for the next meeting therefore lists all aspects that can or should be considered in connection with low or negative interest rates and the question whether a low interest environment would produce accounting information that does not appropriately represent the underlying economic phenomena in accordance with the business model.

Please click to access the press release on the EFRAG website announcing the next Board meeting. It offers access to the full agaenda and the meeting papers, including the one on accounting implications of low or negative interest rates.

The agenda has been released for the upcoming meeting of the Transition Resource Group for Impairment of Financial Instruments (ITG), which is being held at the IASB's office in London on 16 September 2015.

The ITG was created to keep the IASB informed on issues occurring during implementation of the new impairment requirements in IFRS 9Financial Instruments, to assist in determining what action may be needed to resolve diversity in practice and to provide a public forum for stakeholders to learn about the new impairment requirements from others involved with implementation.

The agenda for the upcoming meeting is as follows:

Wednesday, 16 September 2015, 10.00-14.15

Introductory remarks

Significant increases in credit risk

Use of changes in the risk of a default occurring over the next 12 months when assessing for significant increases in credit risk